After four consecutive months, inflation is rising tremendously in India. Inflation rose marginally to 6.84% in February, 2013 as food items such as rice, wheat, onions and fruits became costlier. Most notably the inflation rate in egg, meat and fish category was at 12.85%. McDonalds currently has over 100 outlets in India and are planning to double it by end of 2013. The inflation rate will cause huge issues as a majority of McDonalds products consist of egg and meat and with the huge inflation rate the materials will become increasingly costly. Furthermore, since India's inflation rate is so high, it will result in an extremely high cost of living, and when a country has a cost of living that is too high, it will result in instability and unrest.

Link to Article:

http://www.thehindu.com/business/Economy/inflation-moves-up-to-684-in-feb/article4508246.ece

 
On January 4th, 2013, President Obama has signed the law of "Food Safety Modernization Act", these laws give the "Food and Drug Association" more power in order to prevent disease outbreaks such as "Salmonella". These laws dictate that produce such as meat and egg must now be handled in systems that are geared to prevent any type of contamination. Furthermore, if any of the produce has found to be contaminated the information must be immediately relayed to the FDA. The FDA also has the right to conduct lab reports on the foods of restaurants such as McDonalds. Recently, on October 2012 employees from a McDonalds restaurant in Bloomington were found to be diagnosed with salmonella, leading to the McDonalds being shut down. Cases of food poisoning from McDonalds also occur regularly all around America. McDonalds needs to start examining their food (especially meat) sources more carefully and where they come from. These laws, though it may force McDonalds to use part of its profit to reinforce or re-new their hygiene systems all around America, may help rebuild the confidence of consumers in McDonalds.

Links to Article:

http://www.examiner.com/article/new-food-safety-laws-as-of-today

http://foodpoisoning.pritzkerlaw.com/archives/cat-mcdonalds-lawsuit.html
 
Political Factor Analysis:
Political concerns for McDonalds restaurants currently operating in Hong Kong are the strict labor laws and the rise of minimum wage to $30. The strict labor laws will make McDonalds hiring process more challenging as there are maximum working hours for days and weeks for specific age cohorts, therefore McDonalds will need to hire more workers to fit this law requirement. Furthermore, paying the increased amount of workers will also be difficult as the shift of minimum wage to $30 is a constraint for McDonalds. But taking these factors into account, McDonalds is a billion dollar multi-national company and these factors will not have a significant impact on McDonalds. McDonalds will definitely be able to keep up with the amount of increased workers and their wage in Hong Kong.

Socio-Cultural Factor Analysis:
McDonalds has been operating in Hong Kong for over 30 years and the market of Hong Kong is one that McDonalds is familiar with. The international language of “English” and “Cantonese” are both of experience to McDonalds and it’s relatively easy to hire employees who are competent in both these languages in Hong Kong. Furthermore, Hong Kong citizens are quite keen on the “doubling” of McDonalds burgers. Over these years, McDonalds have had “double cheeseburgers”, “double McFillet”, “double quarter pounders” etc and the market of Hong Kong has been responding positively to these “burgers”. Therefore, McDonalds can consider doubling more of its burgers to earn more profit and cater to the markets wants.

A major socio-cultural threat to McDonalds operating in Hong Kong, would be that Hong Kong citizens are now more aware of health and food related issues thanks to the government and advertising from NPO’s. This is a major threat as McDonalds will be losing a significant amount of customers due to this developing trend as McDonalds portray a strong image of unhealthy foods and obesity. Furthermore, a large part of McDonalds target market is made up of children and parents bring children to McDonalds. If this developing trend continues, parents may start to steer their children away from McDonalds which will lead to a significant decline in sales and profit.

Evaluation:

Taking the political and socio-cultural opportunities and threats into account, McDonalds should not change its international marketing strategy in Hong Kong. Looking from a political perspective, the situation in Hong Kong is relatively stable and the government is extremely open to direct foreign investment, making it easy for McDonalds to expand in Hong Kong as it is doing now. The minimum wage and strict labor laws will pose as a disadvantage but it will not create a significant impact on a well equipped, well resourced company like McDonalds. The fast paced lifestyle of Hong Kong citizens and the relatively high income will also ensure that McDonalds have a steady amount of customers. Though it is true that Hong Kong citizens are shifting to a more healthy diet, but if McDonalds were to cater to the demands of healthy eaters, they would alter their brand image entirely. Also, they would need to spend a lot of money on product research to develop healthy products that cater to the markets wants. Furthermore, if people were to eat healthy, they would never look to McDonalds as their first choice, making it futile for McDonalds to develop healthy products in the first place. McDonalds has built up brand loyalty over the 30 years operating in Hong Kong and customers will not switch so easily, therefore McDonalds does not need to frantically develop healthy products in fear that consumers might move away from them. In conclusion, McDonalds should keep its international marketing strategy of Hong Kong as it is.

 
Recently there have been a huge scandal over the topic of "beef products" and what is really in the "beef". The EU has found specimens of horsemeat in beef after conducting tests all over Europe. This scandal initially started after the discovery of horsemeat in Irish burgers. The EU is drastically launching DNA tests over beef products for the presence of unlabelled horsemeat and tests found 1% of horsemeat in samples undertaken in the study. These "horsemeat" containing beef products are finding their way into shelves in supermarket and schools are having their meat pies removed. This will affect McDonalds because a majority of their products contain beef, and now that this scandal has occurred consumers will be less likely to purchase beef produts, as they will be skeptical and doubtful about where their meat comes from and what it contains, more so from McDonalds as they already have a poor reputation regarding their meat quality. Though horsemeat has yet to be found in McDonalds burgers and Warren Anderson, Vice President of McDonalds UK supply chain remains confident in positive results. People are more aware of what goes into their food now and some are choosing to eat more healthy. According to the American Dietetic Association (ADA) the recent food trend is that Americans are eating more vegetables, chicken and whole grain foods. This scandal certainly poses as an issue for McDonalds and will affect the consumer behavior in a negative way.

Link to Articles:

http://www.euronews.com/2013/02/16/still-more-horse-meat-found-in-european-beef-products/

http://youngevity.com/news-events/ada-consumers-eating-more-healthy-foods-but-we-still-have-a-long-way-to-go/

http://www.guardian.co.uk/uk/2013/feb/28/mcdonalds-free-horsemeat-link-farmers


 
 
McDonalds, being a leader in the fast food industry, has to accept that food trends are always and constantly changing, and that what may seem like a popular product before may well be junk the next day. When firms/companies introduce new products, they will already bear in mind that the product will one day be at the decline phase of the product life cycle, and when that time arrives companies will try to extend that products life cycle.

Here are a few strategies McDonalds can use to extend their product's life cycle
1. Make modifications to the product
    Modify the product in terms of adding more materials to it (extra layer of beef, fillet) or changing the         materials inside it so that it will appeal to customers again. *though McDonalds must be careful not to         bring significant changes to the product, or the product will lose its originality and it will just be like             introducing a new product to the market

2. Reducing the price
    This strategy will definitely work if McDonalds wants to prolong a certain product's life cycle, as                  one of the most appealing factors of McDonalds burgers is price, and customers who walk in McDonalds
    are looking for something cheap and tasty. Lowering the price of that burger or the McNuggets will             definitely bring appeal to the product.

3. Introduce new varieties to the product
    This strategy will help bring creativity and originality to McDonalds products. E.g. If the white ice                 cream is in the decline stage of the product life cycle and it is losing its appeal to customers, McDonalds     can try to add different flavors to the ice cream, such as chocolate flavored ice cream or mango flavored     ice cream, these new changes to the product will definitely appeal to customers and lengthen the                 products life cycle.
   
 
Above is the diagram of McDonalds product range and shows McDonalds product items, depth of McDonalds various product lines and the breadth of McDonalds product mix. *Note: This diagram does not include all the products that McDonalds offers and all the variety of the same product it offers, this is just a brief diagram of McDonalds product portfolio. As you can see above, McDonalds has a very large collection of product items for each product line and it has significant depth in each product line. * In an average McDonalds restaurant there are 20+ burgers for your choice and they continue to invent new burgers everytime to satisfy consumers. Furthermore, McDonalds has a very broad product mix, providing products from burgers, ice cream, drinks and even salad. With the huge product range of McDonalds, advantages would be that there are more choices for the customers and they can satisfy/suit the wants of different market segments. Furthermore, with McDonalds diversification of its products and its extensive product range, it will be easier for McDonalds to grow and expand.

Being the fast food industry leader as it is, generating $6.95 billion in revenue in 2012, potential marketing objectives for McDonalds might be to
1. To grow market share by 10% in fast food market
2. Target the market segment of healthy eaters and meet their wants (creating healthier products)
 
This article talks about an astounding scientific breakthrough, and that is the applications of neuro-marketing. The process involves wearing an electroencephalogram (EEG) cap with electrodes placed all over the consumers head, along with goggles that track eye movement. The cap is able to measure electrical impulses and the goggles are able to track where the consumer is looking when examining a product, hence researchers can immediately tell if the consumer is attracted to the product or not. This can be really useful for McDonalds as they can change their marketing strategies to properly capture the consumers attention. E.g. The use of different colors and ingredients in the advertisements of burgers.

Link to Article:

http://www.cbc.ca/news/technology/story/2012/12/20/inside-your-brain-neuromarketing.html

 
As mentioned in a previous post, Japan currently has the second most number of McDonalds in its country with over 3600 restaurants, just falling behind USA, making it a vital part in McDonalds chain of restaurants all over the world. Japan's economy is currently in a recession with deflation and other issues occurring. Recently, the Japanese government has approved a $116 billion dollar stimulus package to revive the economy. The package is estimated to boost Japan's economy by 2%,create 600,000 jobs and raise income levels in Japan. This will impact McDonalds greatly because this package will increase the consumer confidence level in Japan. The economy of Japan is in a recession and thus people will be less likely to eat out or spend money on fast food restaurants such as McDonalds. With this $116 billion dollar package, more jobs will be created and income levels will rise, when the consumers have increased amount of income and they have more confidence in the economy, they will be more willing to spend in on McDonalds instead of just eating home and being conservative.

Link to Article:

http://www.bbc.co.uk/news/business-20981874
 
The "Labour Party" in UK are urging governments to introduce legal limits on sugar, salt and fat content in food. The Party says the "Department of Health's" voluntary agreement with food companies to make their products healthier is not working. Their argument is that NHS data indicates that one third of children in UK are either overweight or obese by the time they leave primary school. If governments do introduce legal limites on sugar, salt and fat content in food it will be a great impact to McDonalds, as all their products either contain one of the three ingredients mentioned. Brand taste is extremely important, and if McDonalds were to redesign their products according to these laws, customers may switch out or even quit McDonalds as they may not like the taste anymore. Sugar, salt and fat content are extremely important elements in McDonalds products, therefore if there are legal limits, McDonalds will need to find other ingredients to replace these so that they can make a product that satisfies the demands of the market, and that may boost production cost or research cost.

Link to Article:

http://www.bbc.co.uk/news/health-20914685